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Will Recent Cuts to Medicare Result in More Americans Choosing Medical Tourism?

Will Recent Cuts to Medicare Result in More Americans Choosing Medical Tourism?

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Last month in the United States, the federal government’s Budget Control Act of 2011 finally went into effect.  It is a law which stipulates for spending reductions totaling $1.2 trillion in order to reduce America’s enormous debt, and as you might imagine, the belt-tightening reaches far and wide.

The budget cuts are split evenly between defense and non-defense programs affecting a range of departments big and small, and one of the bigger social programs feeling the effects is Medicare, the national health insurance scheme that provides coverage to roughly 50 million Americans.  Its spending is being reduced by 2% per year, which doesn’t sound like much, but it’s already taking its toll in at least one specific area.

Medicare used to reimburse oncology clinics for the costs associated with chemotherapy drugs, plus a 6% mark-up; as of April 1st, Medicare is only able to provide an additional 4%.  Due to this reduction, and chemotherapy’s often staggering costs, many clinics can no longer afford to provide the necessary treatments and are starting to turn patients away.

Might this have an effect on the medical tourism industry?  Will the long list of more affordable medical treatments that are available overseas see an uptick in chemotherapy and possibly other kinds of cancer care?  Since it appears that American cancer patients can be denied treatment from their preferred doctors and clinics due to costs, will they consider heading overseas?

On that last point, it sure seems possible when you break it down.  For one thing, with the number of clinics able to provide chemotherapy drugs shrinking, but the amount of patients remaining the same, wait times for treatment will most likely increase.  How much remains to be seen.  Secondly, the budget cuts do not stop at chemotherapy drugs.  They are practically across the board, and even as high as 7.6% in some instances, which has the potential to cost oncology clinics in other areas besides chemo, leading to the denial of even more patients and an even smaller pool of clinics from which to choose.  And, if turned away, will patients want to go to non-specialist hospitals and accept potentially lesser expertise and, again, longer waits?  Where can cancer patients go if the situation in the US doesn’t meet their needs?

With respect to chemotherapy, India may be the answer.  One common and effective drug used for combating leukemia is called Gleevec, and an annual supply wholesales for $75,000 USD.  It is not alone in the world of ridiculously expensive cancer medications, but it was singled out recently by cancer researchers who published a report about exorbitant pharmaceuticals.  In an unrelated article in The Atlantic, this drug was again the focus in a story detailing how drugs that are under patent in the US – like Gleevec – aren’t in India, and as a result can be sold at steep, steep discounts.

In the case of Gleevec, that $75,000 cost (again, that’s a wholesale price, sans markup) will run a mere $2,500 per year from cancer centers in India, which for many people is affordable as an out-of-pocket expense.  So if you throw in expertise in oncology, convenience in terms of wait-times, and an exotic holiday……Mumbai medical tourism, anybody?

Where else?  Well, anyone considering going to Singapore for medical tourism nowadays is certainly aware of its excellence in certain areas of specialized medicine.  The country is at the forefront of the personalized approach to oncology, and it has the world’s sixth-best healthcare system according to the World Health Organization (WHO), which includes esteemed American hospital Johns Hopkins’ first international clinic specializing in the diagnosis and treatment of various forms of cancer.

Malaysia is becoming a hotspot for medical travel, and is starting to make a name for itself in terms of oncology treatments as well.  KPJ Healthcare – one of Malaysia’s leading medical services networks – is converting three of its major hospitals to cancer centers, and the country’s existing oncology clinics are some of the best in Southeast Asia.

How about the budget cuts’ effect on the rest of Medicare?  Remember, it’s not only chemotherapy that’s getting slashed by 2%, so there might be other opportunities for medical tourism besides just cancer treatments abroad.  The so called “sequester” is law through the year 2022, meaning there’s a long way to go for providers to absorb these reductions which, as we’ve seen, have the potential to change the way they’re giving care and treating patients.